Through its battery cell supplier AESC, BMW has signed a ten-year agreement with Umicore to source high-nickel materials locally for the company’s US production. The supply chain will serve BMW’s round cell technology, featured in the company’s next generation of BEVs. It is also a necessary move to keep benefitting from Joe Biden’s IRA incentives.
BMW calls it a ‘local for local’ principle, where critical materials are sourced near the battery cell manufacturing plant. The company’s North American partner, AESC, is currently constructing a plant in Florence, South Carolina, in the vicinity of Spartanburg, the factory where models like the X3 and X5 are built and where BMW is constructing an assembly plant for battery cells called Woodruff. The Florence site will have a capacity of 30 GWh per year.
From 2026 to 2035, AESC will source its cathode active materials from Umicore, from its Ontario plant currently under construction. The supplier calls the deal a sign of faith in Umicore’s leadership and “its capability to efficiently produce battery materials with such elevated nickel levels at industrial scale”.
CEO of Umicore Matthias Miedreich said: “Our shared commitment to the principles of local-for-local battery value chains unites our efforts toward clean electric mobility.” The contract secures an annual volume of 50 GWh of cathode active materials for Umicore. This exceeds what the Florence plant can process, but the deal extends to other factories from AESC.
For BMW, AESC is ramping up the technology for its sixth-generation eDrive, which will debut in the highly anticipated Neue Klasse, ready for the market in 2025. However, introducing the cylindrical cells that mark the new generation in the US will be more important in the range of all-electric X models, for which Spartanburg is gearing up. The round cells can drive costs down by 30%, be sourced more sustainably, and recharge faster at DC stations. It’s also a favorite of Tesla.
With AESC, Umicore has caught a big fish. The investment in its Ontario factory is also sound, as the company receives 551,3 million Canadian dollars (€ 383 million) from the Canadian government, supplemented by 424,6 million Canadian dollars (€ 295 million) from Ontario.
In return for government support, Umicore provides jobs to 600 people in the region. Umicore invests 1,2 billion euros in the Loyalist factory. The same ‘generous’ aid was lent to Volkswagen, which received up to 13 billion (U.S.)dollars (€ 12,3 billion) for constructing its battery plant in Ontario.
80% by 2026
Canada is a valid partner of the US and eligible for the rulings under the Biden Inflation Reduction Act. To apply for a clean vehicle credit, 50% of the battery materials must be extracted or processed in the US or a free-trade partner like Canada as of next year.
But by 2026 already, that rate rises to 80%. BMW, AESC, and Umicore are joining forces so that the all-electric X models can keep their edge against vehicles from local manufacturers in the near future.